Mudenda advises Merlin to make diapers not napkins

ONE of Bulawayo's iconic textile firms, Merlin, needs a total overhaul of its production model so it can be turned around, Speaker of the National Assembly Jacob Mudenda has said.

Addressing delegates at the Zimbabwe National Chamber of Commerce (ZNCC) 2017 annual congress in Victoria Falls held last week, Mudenda said Merlin should bring in new machinery through joint ventures to revive production.

"With my humble apology to my young man who is trying to revive this company, Merlin, the machinery there was designed to produce napkins, but these little children no longer use napkins," he said.

"So the production model of Merlin needs a total overhaul and bring in machinery that will produce diapers not those big napkins. If I was a business analyst, a consultant, this is what I will tell that company. Look for a joint venture that will bring in equipment to produce what the market wants."

Merlin, established in 1954 and owned by businessman, Delma Lupepe, requires $30 million fresh capital spread over a period of five to 10 years to be brought back to life.

Lupepe took over Merlin in 2004 through his investment vehicle, Maydeep Investments (Private) Limited, after the troubled textiles giant was discharged from judicial management.

By the time he bought the company, technology was moving ahead of it and the arrival of diapers, which killed the cotton nappy business, and the influx of cheap linen products from Asia did not help matters.

Merlin judicial manager, Cecil Madondo, in January, told creditors that the company would be liquidated if it did not find new investors to raise working capital and resume operations by June 30.

However, he recently revealed that the company would not be liquidated, as he was in talks with some unnamed potential investors.

Merlin requires $2,1 million in the short-term to purchase raw materials and to refurbish the plant and machinery to start production.

A further $4,5 million would be needed for major repairs and maintenance to bring the company back to near full capacity.

The company would require $23,4 million for a new plant, while $6,3 million would also be required to discharge the company's liabilities.

Merlin's total assets currently stand at $2,2 million down from $3,8 million when the company was placed under judicial management in 2011.

Its current liabilities are at $6,2 million, up from $4,3 million in 2013.